Case Study: Mobile Health Electronics Ltd Manufacturing – Make to stock
Mobile Health Electronics Ltd (MHE) is an Australian manufacturer of wearable monitoring devices that are sold for use in hospitals and retail outlets. Their home office is in Melbourne, which is also the headquarters for the main sales office. A sales office is also located in Sydney, NSW. The company has two manufacturing plants in Australia: one in Melbourne, and another one in Liverpool, NSW. Distribution centres are also located at each of the current manufacturing plants. The company recently added a China sales force in Beijing which includes a manufacturing facility and a distribution centre. The company is keen to expand into India, to develop and sell healthcare mobile hand-held computers there, and also open a sales and trainings office in the UK to expand its operation in Europe and North America.
Each of the manufacturing plants acts as an independent company maintaining separate sets of books and operating more or less autonomously. The Melbourne home office has had their own ERP system for 7 years but Liverpool and Sydney’s operation have been supported by using a variety of legacy systems to assist their manufacturing plant, human resource, financials, procurement and sales and distribution.
With a wide range of IT systems in place, the company thinks a centralised and robust ERP system will allow for process standardisation across its plants and offices, particularly to enable centralized procurement and sales functions. They also want to be able to consolidate financial statements as well as look at sales by product across the companies.
Selling of the products is done with a sales force that calls on warehouse and retail sales outlets such as, JB Hi Fi, OfficeWorks, and Harvey Norman stores, or by directing visiting hospitals and healthcare service providers. The Company also manufactures and sells replacement parts.
Traditionally, the company’s CEO and marketing manager travel to trade fares around the world to promote their scanners and mobile hand-held computers. However, they have been also looking into
starting an on-line shopping cart web site where they could promote their products and sell parts and products online. They are also considering providing online trainings to their sales representatives and staff across the world.
Mobile Health Electronics Ltd is a growing company that needs standard operations across its manufacturing, sales and inventory activities. Currently, its IT systems lack the flexibility and scalability to support its growth into new markets over the next decade. Furthermore, the current IT systems do not provide the data standardization needed for analysing the costs and profitability of different products, by sales regions and customer. Mobile Health Electronics Ltd is yet to develop a healthcare mobile hand-held computer which can be used in both developed and developing countries but again their systems need to be upgraded to allow for this strategic direction. Another key strategy for MHE is its commitment to customer satisfaction by delivering the product(s) at the right time, right place, and at the right price. This may require make to order as well as make to stock products. MHE is organized around processes that are focused on the value add to customers.
Some additional high-level facts about MHE are as follows:
- MHE products need to be customized for value added resellers (VARs) by application of the reseller’s logo at assembly.
- Individual customers do not have direct influence over the product or its function, shape, and size; however this is something that the Board of Directors (BoDs) is considering changing in the future to allow individual customers the opportunity to create specialised mobile devices.
- Sales planning and product design are determined by management in cooperation with other staff members.
- All sales are maintained in Australian/US currency only, even though the company does business with other countries like China.
- The company currently sources “raw materials” - parts, subassemblies and even one final product from Korea, Japan, and Germany. These components require strict quality assurance processes. The company is keen to maintain its current network of suppliers but also seeking possibilities of working with more suppliers from other countries such as the US and New Zealand.
Emerging Business Requirements and Future Challenges
With the fast changing and highly competitive business environment, the management of MHE have realised that the current implementation of their legacy ERP and other enterprise systems which have been in operation for about 7 years has its share of limitations. The management has realised that new business requirements and drivers are emerging. They have also realized if they are not proactive, the emerging requirements can negatively influence the company’s competitive advantage and market share and as such, they need to act quickly.
Also, the traditional hyper-connected customer centric business models adopted by MHE are causing the company to fall behind in its interactions with its customers as customers are the real drive for change. However, the company is currently very slow to respond and adapt to changing circumstances.nt priority. The increasing mobility of managers, staff, clients and competitors, has created a huge network of mobile information and expertise. The company has realized that they need an effective and efficient way of supporting, managing and taking advantage of the networking opportunities that such a network of mobile workforce and clients offer. They are particularly interested in taking advantage of such a network for improving the design of their products and also developing a collaborative marketing strategy.
You are employed by Mobile Health Electronics Ltd as a Business Systems Requirements Analyst on a contractual basis. You have had extensive experience with enterprise systems projects, specifically in managing software implementations in manufacturing organisations.
You have been asked by the Board to work on the Enterprise System adoption and implementation. You need to prepare a report that helps the BoD to make an informed decision with regards to purchasing an ERP system. Your report and recommendations should include the following information:
An analysis of the current situation
Briefly analyse and argue the benefits and drawbacks of using a new ERP system.
Business requirements and drivers
Develop a list of MHE’s business requirements and business drivers (at least 10 items). Provide a brief description for each item on the list. Make sure your description is linked to MHE and its business context.
Linking requirements to ERP functionalities
Using the list you developed in A2, create a table that includes:
1- A column of the identified items on the list
2- A column that specifies whether each item is a business driver or a business requirement
3- Identify business process(es) that can support or fulfill each of these business drivers or requirements
4- Identify the type of data or information that is required for the successful completion of each business process.
5- Against each business driver or requirement in the table, choose ERP functionalities that can help MHE to meet/achieve the business requirement/driver.
6- Provide a justification for each choice you made in step 5.
B - Software selection process
Information and assumptions
Identify any other information you would require for recommending the best ERP solution to MHE. Identify where this information can potentially be found (information sources) and then make assumptions in your report about the information items. You need to justify your assumptions by explaining why they are valid assumptions and how they may impact your recommendations.
Recommendation of a solution
Using the information you identified in Section A and the assumptions you made in Section B1, research the following enterprise systems and recommend the best solution to MHE.
- SAP Business Suite 4 SAP HANA (a.k.a SAP S/4HANA)
Your answer needs to be justified. Use a Rich Picture approach to justify your recommended solution.
C- Laying the foundations for business value and digital transformation through digital disruption
The management team of Mobile Health Electronics Ltd is fully aware that they need to lay the foundations for business value and digital business transformation. This focus was something they considered when they decided to implement a new ERP system suite. The Board of Directors is concerned if they do not focus their future approach on digital transformation they will lose their competitive advantage with their customers and be left behind.
The CEO of Mobile Health Electronics Ltd has recently attended a Deloitte presentation: “Harnessing the ‘bang’: Stories from the digital frontline.” Findings indicate that 13 industries comprising 65% of the Australian economy are facing significant digital disruption by 2017. (Located at:http://www2.deloitte.com/au/en/pages/building-lucky-country/articles/digital-disruption-harnessing-the-bang.html)
- Define what is meant by digital disruption by using case studies as examples to aid your definition.
- Discuss the major advantages and disadvantages (risks) to Mobile Health Electronics Ltd should they not focus their attention on digital disruption.
- Identify specific ways in which Mobile Health Electronics Ltd can improve:
- Their digital disruption performance,
- competitive differentiation and
- Conclude with a recommendation on your findings for Mobile Health Electronics Ltd.